Many older games with 3D maps have this limitation (e.g. the Total War series).
The 3D shape of the landscape is generated from a greyscale elevation map, where zero elevation (the darkest black) is defined as water, while the rest of pixels are used to define terrain elevations. This way, you can create pretty realistic flatland landscapes with lakes and canals, and pretty realistic hilly landscapes without rivers, but it's impossible to create a realistic river valley where the water comes down to sea level.
There must be some workarounds. I've seen mountain lakes (water on a non-zero elevation level) on some modded maps, but generally it seems to be a game engine limitation that all water is always 'flat' and on the same elevation level.
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